Air Force says Boeing protest too late

WASHINGTON (Reuters) - Five issues raised by Boeing Co in a protest against a $35 billion aircraft deal should be thrown out because they were improper or should have been raised before final bids were submitted, the U.S. Air Force said in documents obtained by Reuters on Tuesday.

The Air Force awarded the contract for 179 aerial refueling aircraft to Northrop Grumman Corp and Airbus parent EADS on February 29. Boeing filed a protest with the Government Accountability Office on March 11.

Boeing said the Air Force changed its requirements and the way it evaluated the competing bids in a way that favored the larger Northrop-Airbus aircraft.

The Air Force decision also triggered howls of protests from Boeing supporters in Congress concerned the deal could shift business and jobs to Europe’s Airbus, Boeing’s chief rival for building commercial airplanes.

The Air Force and Northrop filed separate motions to dismiss parts of the Boeing protest on March 26, but the Air Force did not publicly release the details of its motion.

A copy of the Air Force motion, which had some portions redacted, cited multiple grounds for the partial dismissal of the Boeing protest. It said the cost risk assigned to Boeing’s proposal was its “own fault” and not due to any foreign government subsidies received by the Northrop team.

Boeing has argued that it was penalized for offering a smaller aircraft when the Air Force really wanted a large airplane. But the Air Force said that claim was “legally baseless” and fell outside GAO’s scope to evaluate.

“The Air Force has provided sufficient information to demonstrate the protest ground ... submitted by the Boeing Company are without legal and factual basis and untimely under GAO regulations,” Air Force lawyers wrote in a letter that accompanied the motion.

“Therefore, the protest ground identified above should be summarily dismissed to facilitate efficient resolution of the remaining protest issues,” the Air Force said.

The Air Force asked the GAO to rule on its motion before the service must respond in full to the protest on April 16.


Air Force acquisition chief Sue Payton also defended the contract award before a House Armed Services subcommittee on Tuesday, telling lawmakers, “At no time were any datasets changed to try to skew or unlevel the playing field.”

She also rejected Boeing’s claim that it did not know it could earn extra credit for beating the minimum requirements, and said the bidders were briefed at least three times about which of the 808 requirements they were getting credit for.

“It was very clear that we had no requirement for size, large or medium. We did have requirements to meet capabilities and there would be extra credit given for exceeding that minimum threshold,” she said.

The Air Force filing made the following points:

* The GAO should dismiss Boeing’s contention that the Air Force changed requirements to favor the larger aircraft offered by its only competitor.

“Boeing’s protest about the size of the tanker selected is untimely because it seeks to change the Air Force’s requirements or challenges the express terms of the solicitation that Boeing should have protested prior to the due date for the receipt of proposals,” the Air Force said.

* Boeing’s claim that the Air Force was unreasonable in how it evaluated aerial refueling was based on an “interpretation problem where Boeing is to blame,” the Air Force said, noting that Boeing should have raised what it considered ambiguous language before it submitted its bid.

* Boeing’s challenge about airlift capacity misstated the evaluation terms, the Air Force said. Boeing argued that the Air Force should have counted “points” but the Air Force said it had to qualitatively assess the competing strengths of each proposal since this was a “best value” competition.

* Boeing’s challenge about a complex Air Force computer model used to assess the bids was also untimely, according to the document. The Air Force said it did not change model provisions after proposals were due, and Boeing knew in advance what “insights or observations” about its bid would be used to make the contract decision.

* Finally, the issue of foreign government subsidies received by the Northrop team also should have been raised before bids were submitted, the Air Force said.

The document said Air Force officials clearly noted that Boeing had a higher cost/price risk when compared with Northrop.

“Boeing’s higher cost/price risk was due to Boeing’s own fault and not due to any subsidies alleged enjoyed by (Northrop Grumman),” the Air Force said.

Editing by Andre Grenon and Tim Dobbyn